While President Ronald Reagan was a supporter of the Contra cause,[6] the evidence is disputed as to whether he authorized the diversion of the money raised by the Iranian arms sales to the Contras.[4][5][7] Handwritten notes taken by Defense Secretary Caspar Weinberger on December 7, 1985, indicate that Reagan was aware of potential hostage transfers with Iran, as well as the sale of Hawk and TOW missiles to "moderate elements" within that country.[8] Weinberger wrote that Reagan said "he could answer to charges of illegality but couldn't answer to the charge that 'big strong President Reagan passed up a chance to free the hostages'".[8] After the weapon sales were revealed in November 1986, Reagan appeared on national television and stated that the weapons transfers had indeed occurred, but that the United States did not trade arms for hostages.[9] The investigation was impeded when large volumes of documents relating to the scandal were destroyed or withheld from investigators by Reagan administration officials.[10] On March 4, 1987, Reagan returned to the airwaves in a nationally televised address, taking full responsibility for any actions that he was unaware of, and admitting that "what began as a strategic opening to Iran deteriorated, in its implementation, into trading arms for hostages".[11]

Several investigations ensued, including those by the U.S. Congress and the three-person, Reagan-appointed Tower Commission. Neither found any evidence that President Reagan himself knew of the extent of the multiple programs.[4][5][7] Ultimately the sale of weapons to Iran was not deemed a criminal offense but charges were brought against five individuals for their support of the Contras. Those charges, however, were later dropped because the administration refused to declassify certain documents. The indicted conspirators faced various lesser charges instead. In the end, fourteen administration officials were indicted, including then-Secretary of DefenseCaspar Weinberger. Eleven convictions resulted, some of which were vacated on appeal.[12] The rest of those indicted or convicted were all pardoned in the final days of the presidency of George H. W. Bush, who had been vice-president at the time of the affair.[13] The Iran-Contra Affair and the ensuing deception to protect senior administration officials including President Reagan has been cast as an example of post-truth politics.[14]

Under the Shah of Iran, the United States was the largest seller of arms to Iran, and the vast majority of the weapons that the Islamic Republic of Iran inherited in January 1979 were American.[15] To maintain this arsenal required a steady supply of spare parts to replace broken and worn out parts. After Iranian students had stormed the American embassy in Tehran in November 1979 and took 52 Americans hostage, President Jimmy Carter had imposed an arms embargo on Iran.[15] After Iraq invaded Iran in September 1980, Iran had a desperate need for weapons and spare parts to maintain its current weapons. After Ronald Reagan took office as President on 20 January 1981, he vowed to continue Carter's policy of blocking arms sales to Iran under the grounds that Iran was a supporter of terrorism.[15] A group of senior Reagan administration officials in the Senior Interdepartmental Group conducted a secret study on 21 July 1981, which concluded that the arms embargo was ineffective as Iran could always buy arms and spare parts for its American weapons elsewhere while at the same time, the arms embargo opened the door for Iran to fall into the Soviet sphere of influence as the Kremlin could sell Iran weapons if the United States would not.[15] The conclusion was that the United States should start selling Iran arms as soon as it was politically possible to keep Iran from falling into the Soviet sphere of influence.[15] At the same time, the openly declared goal of Ayatollah Khomeini to export his Islamic revolution all over the Middle East and overthrow the governments of Iraq, Kuwait, Saudi Arabia and the other Persian Gulf states led to the Americans perceiving Khomeini as a major threat to the United States.[15] In the spring of 1983, the United States launched Operation Staunch, a wide-ranging diplomatic effort to persuade other nations all over the world not to sell arms or spare parts for weapons to Iran.[15] At least part of the reason why the Iran–Contra affair proved so humiliating for the United States when the story first broke in November 1986 that the US was selling arms to Iran was that American diplomats as part of Operation Staunch had from the spring of 1983 on had been lecturing other nations about how morally wrong it was to sell arms to the Islamic Republic of Iran and applying strong pressure to prevent any arms sales to Iran.[15]

Contra militants based in Honduras waged a guerrilla war to topple the Sandinista National Liberation Front (FSLN) revolutionary government of Nicaragua. Almost from the time he took office in 1981, a major goal of the Reagan administration was the overthrow of the left-wing Sandinista government in Nicaragua by backing the Contra rebels.[16] The Reagan administration's policy towards Nicaragua produced a major clash between the executive and legislative arms as Congress sought to limit if not curb altogether the ability of the White House to support the Contras.[16] Direct U.S. funding of the Contras insurgency was made illegal through the Boland Amendment,[7] the name given to three U.S. legislative amendments between 1982 and 1984 aimed at limiting U.S. government assistance to the Contra's militants. Funding ran out for the Contras by July 1984 and in October a total ban was placed in effect. The second Boland amendment in effect from 3 October 1984 to 3 December 1985 stated:

"During the fiscal year 1985 no funds available to the Central Intelligence Agency, the Department of Defense or any other agency or entity of the United States involved in intelligence activities may be obligated or expended for the purpose of or which may have the effect of supporting directly or indirectly military or paramilitary operations in Nicaragua by any nation, organization, group, movement, or individual.[16]

In violation of the Boland Amendment, senior officials of the Reagan administration continued to secretly arm and train the Contras and provide arms to Iran, an operation they called "the Enterprise".[17][18] As the Contras were heavily dependent upon U.S. military and financial support, the second Boland amendment threatened to break the Contra movement and led to President Reagan in 1984 to order the National Security Council (NSC) to "keep the Contras together 'body and soul'", no matter what Congress voted for.[16]

A major legal debate that was at the center of the Iran–Contra affair concerned the question of whatever the NSC was one of the "any other agency or entity of the United States involved in intelligence activities" covered by the Boland amendment with the Reagan administration arguing it was not, and many in Congress arguing it was.[16] The majority of constitutional scholars have asserted the NSC did indeed fall within the purview of the second Boland amendment, through the amendment did not mention the NSC by name.[19] More broadly was the constitutional question at stake, namely the power of Congress vs. the power of the presidency. The Reagan administration argued that because the constitution assigned the right to conduct foreign policy to the executive arm that its efforts to overthrow the government of Nicaragua were a presidential prerogative that Congress had no right to try to halt via the Boland amendments.[20] By contrast congressional leaders argued that the constitution had assigned Congress control of the budget, and Congress had every right to use that power not to fund projects like attempting to overthrow the government of Nicaragua that they disapproved of.[20] As part of the effort to circumvent the Boland amendment, the NSC established "the Enterprise", an arms-smuggling network headed by a retired U.S. Air Force officer turned arms dealer Richard Secord that supplied arms to the Contras that was ostensibly a private sector operation, but in fact was controlled by the NSC.[19] To fund "the Enterprise", the Reagan administration was constantly on the look-out for funds that came from outside the U.S. government as not to explicitly violate the letter of the Boland amendment, though the efforts to find alternative funding for the Contras violated the spirit of the Boland amendment.[21] Ironically, military aid to the Contras was reinstated with Congressional consent in October 1986, a month before the scandal broke.[22][23]

On 17 June 1985, the National Security Adviser Robert McFarlane wrote a National Security Decision Directive, which called for the United States to begin a rapprochement with the Islamic Republic of Iran.[15] The paper read:

"Dynamic political evolution is taking place inside Iran. Instability caused by the pressures of the Iraq-Iran war, economic deterioration and regime in-fighting create the potential for major changes inside Iran. The Soviet Union is better positioned than the U.S. to exploit and benefit from any power struggle that results in changes from the Iranian regime...The U.S should encourage Western allies and friends to help Iran meet its import requirements so as to reduce the attractiveness of Soviet assistance...This includes provision of selected military equipment".[24]

The Defense Secretary Caspar Weinberger was highly negative, writing on his copy of McFarlane's paper: "This is almost too absurd to comment on...like asking Qaddafi to Washington for a cozy chat."[25] The Secretary of State George Shultz was also opposed, stating that having designated Iran a State Sponsor of Terrorism in January 1984, how could the United States possibly sell arms to Iran?[25] Only the Director of the Central Intelligence Agency William Casey supported McFarlane's plan to start selling arms to Iran.[25] In early July 1985, the historian Michael Ledeen, a consultant of National Security AdviserRobert McFarlane, requested assistance from Israeli Prime MinisterShimon Peres for help in the sale of arms to Iran.[26][27] Having talked to an Israeli diplomat David Kicmche and Leeden, McFarlane learned that the Iranians were prepared to have Hezbollah release American hostages in Lebanon in exchange for Israelis shipping Iran American weapons.[25] Having been designated a State Sponsor of Terrorism since January 1984,[28] Iran was in the midst of the Iran–Iraq War and could find few Western nations willing to supply it with weapons.[29] The idea behind the plan was for Israel to ship weapons through an intermediary (identified as Manucher Ghorbanifar)[4] to the Islamic republic as a way of aiding a supposedly moderate, politically influential faction within the regime of Ayatollah Khomeini who was believed to be seeking a rapprochement with the United States; after the transaction, the United States would reimburse Israel with the same weapons, while receiving monetary benefits.[30] McFarlane in a memo to Shultz and Weinberger wrote:

"The short term dimension concerns the seven hostages; the long term dimension involves the establishment of a private dialogue with Iranian officials on the broader relations...They sought specifically the delivery from Israel of 100 TOW missiles...[25]

The plan was discussed with President Reagan on 18 July 1985 and again on 6 August 1985.[25] Shultz at the latter meeting warned Reagan that "we were just falling into the arms-for-hostages business and we shouldn't do it".[25]

The Americans believed that there was moderate faction in the Islamic republic headed by Akbar Hashemi Rafsanjani, the powerful speaker of the Majlis who was seen as a leading potential successor to Khomeini and who was alleged to want a rapprochement with the United States.[31] The Americans believed that Rafsanjani had the power to order Hezbollah to free the American hostages and by establishing a relationship with him by selling Iran arms would ultimately place Iran back within the American sphere of influence.[31] It remains unclear if Rafsanjani really wanted a rapprochement with the United States or was just playing along naïve Reagan administration officials who were desperate to believe that he was a moderate who would effect a rapprochement.[31] Rafsanjani, whose nickname is "the Shark" was described by the British journalist Patrick Brogan as a man of great charm and formidable intelligence known for his subtlety and ruthlessness whose motives in the Iran–Contra affair remain completely mysterious.[31] The Israeli government required that the sale of arms meet high level approval from the United States government, and when McFarlane convinced them that the U.S. government approved the sale, Israel obliged by agreeing to sell the arms.[26]

In 1985, President Reagan entered Bethesda Naval Hospital for colon cancer surgery. While the President was recovering in the hospital, McFarlane met with him and told him that representatives from Israel had contacted the National Security Agency to pass on confidential information from what Reagan later described as the "moderate" Iranian faction headed by Rafsanjani opposed to the Ayatollah's hardline anti-American policies.[30] According to Reagan, these Iranians sought to establish a quiet relationship with the United States, before establishing formal relationships upon the death of the aging Ayatollah.[30] In Reagan's account, McFarlane told Reagan that the Iranians, to demonstrate their seriousness, offered to persuade the Hezbollah militants to release the seven U.S. hostages.[32] McFarlane met with the Israeli intermediaries;[33] Reagan claimed that he allowed this because he believed that establishing relations with a strategically located country, and preventing the Soviet Union from doing the same, was a beneficial move.[30] Although Reagan claims that the arms sales were to a "moderate" faction of Iranians, the Walsh Iran/Contra Report states that the arms sales were "to Iran" itself,[34] which was under the control of the Ayatollah.

Following the Israeli–U.S. meeting, Israel requested permission from the United States to sell a small number of BGM-71 TOW antitank missiles to Iran, claiming that this would aid the "moderate" Iranian faction,[32] by demonstrating that the group actually had high-level connections to the U.S. government.[32] Reagan initially rejected the plan, until Israel sent information to the United States showing that the "moderate" Iranians were opposed to terrorism and had fought against it.[35] Now having a reason to trust the "moderates", Reagan approved the transaction, which was meant to be between Israel and the "moderates" in Iran, with the United States reimbursing Israel.[32] In his 1990 autobiography An American Life, Reagan claimed that he was deeply committed to securing the release of the hostages; it was this compassion that supposedly motivated his support for the arms initiatives.[4] The president requested that the "moderate" Iranians do everything in their capability to free the hostages held by Hezbollah.[36] Reagan always insisted in public after the scandal broke in late 1986 that purpose behind the arms-for-hostages trade was to establish a working relationship with the "moderate" faction associated with Rafsanjani to facilitate the reestablishment of the American-Iranian alliance after the soon to be expected death of Khomeini, to end the Iran-Iraq war and end Iranian support for Islamic terrorism while downplaying the importance of freeing the hostages in Lebanon as a secondary issue.[37] By contrast, when testifying before the Tower Commission, Reagan declared that hostage issue was the main reason for selling arms to Iran.[38]

On August 20, 1985, Israel sent 100 American-made TOW missiles to Iran through an arms dealer named Manucher Ghorbanifar. Subsequently, on September 14, 1985, 408 more TOW missiles were delivered. On September 15, 1985, following the second delivery, Reverend Benjamin Weir was released by his captors, the Islamic Jihad Organization.[41]

Robert McFarlane resigned on December 4, 1985,[42][43] citing that he wanted to spend more time with his family.[44] He was replaced by Admiral John Poindexter.[45]

Two days later, Reagan met with his advisors at the White House, where a new plan was introduced. This one called for a slight change in the arms transactions: instead of the weapons going to the "moderate" Iranian group, they would go to "moderate" Iranian army leaders.[46] As the weapons were delivered from Israel by air, the hostages held by Hezbollah would be released.[46] Israel would continue to be reimbursed by the United States for the weapons. Though staunchly opposed by Secretary of StateGeorge Shultz and Secretary of DefenseCaspar Weinberger, the plan was authorized by Reagan, who stated that, "We were not trading arms for hostages, nor were we negotiating with terrorists".[47] In his notes of a meeting held in the White House on 7 December 1985, Weinberger wrote he told Reagan that this plan was illegal, writing:

"I argued strongly that we have an embargo that makes arms sales to Iran illegal and President couldn't violate it and that "washing" transactions thru Isreal wouldn't make it legal. Shultz, Don Regan agreed".[48]

Weinberger's notes has Reagan saying he "could answer charges of illegality but he couldn't answer charge that 'big strong President Reagan' passed up a chance to free hostages".[48] Now retired National Security Advisor McFarlane flew to London to meet with Israelis and Ghorbanifar in an attempt to persuade the Iranian to use his influence to release the hostages before any arms transactions occurred; this plan was rejected by Ghorbanifar.[46]

On the day of McFarlane's resignation, Oliver North, a military aide to the United States National Security Council (NSC), proposed a new plan for selling arms to Iran, which included two major adjustments: instead of selling arms through Israel, the sale was to be direct, and a portion of the proceeds would go to Contras, or Nicaraguan paramilitary fighters waging guerrilla warfare against the democratically-elected Sandinista government, at a markup. The dealings with the Iranians were conducted via the NSC with Admiral Poindexter and his deputy Colonel North, with the American historians Malcolm Byrne and Peter Kornbluh writing that Poindexter granted much power to North "...who made the most of the situation, often deciding important matters on his own, striking outlandish deals with the Iranians, and acting in the name of the president on issues that were far beyond his competence. All of these activities continued to take place within the framework of the president's broad authorization. Until the press reported on the existence of the operation, nobody in the administration questioned the authority of Pointdexter's and North's team to implement the president's decisions".[49] North proposed a $15 million markup, while contracted arms broker Ghorbanifar added a 41% markup of his own.[50] Other members of the NSC were in favor of North's plan; with large support, Poindexter authorized it without notifying President Reagan, and it went into effect.[51] At first, the Iranians refused to buy the arms at the inflated price because of the excessive markup imposed by North and Ghorbanifar. They eventually relented, and in February 1986, 1,000 TOW missiles were shipped to the country.[51] From May to November 1986, there were additional shipments of miscellaneous weapons and parts.[51]

Both the sale of weapons to Iran, and the funding of the Contras, attempted to circumvent not only stated administration policy, but also the Boland Amendment.[7] Administration officials argued that regardless of the Congress restricting the funds for the Contras, or any affair, the President (or in this case the administration) could carry on by seeking alternative means of funding such as private entities and foreign governments.[52] Funding from one foreign country, Brunei, was botched when North's secretary, Fawn Hall, transposed the numbers of North's Swiss bank account number. A Swiss businessman, suddenly $10 million richer, alerted the authorities of the mistake. The money was eventually returned to the Sultan of Brunei, with interest.[53]

On January 7, 1986, John Poindexter proposed to the president a modification of the approved plan: instead of negotiating with the "moderate" Iranian political group, the United States would negotiate with "moderate" members of the Iranian government.[54] Poindexter told Reagan that Ghorbanifar had important connections within the Iranian government, so with the hope of the release of the hostages, Reagan approved this plan as well.[54] Throughout February 1986, weapons were shipped directly to Iran by the United States (as part of Oliver North's plan, without the knowledge of President Reagan) and none of the hostages were released. Retired National Security Advisor McFarlane conducted another international voyage, this one to Tehran; bringing with him a gift of a bible having a handwritten inscription by Ronald Reagan;[55][56] and, according to George Cave a cake baked in the shape of a key.[55]Howard Teicher described the cake as a joke between North and Ghorbanifar.[57] He met directly with Iranian officials associated with Rafsanjani that sought to establish U.S.-Iranian relations in an attempt to free the four remaining hostages.[58] The American delegation comprised McFarlane, North, Cave (a retired CIA agent who worked in Iran in the 1960s-70s), Teicher, an Israeli diplomat Amiram Nir and a CIA translator arrived in Tehran in an Israeli plane carrying forged Irish passports on 25 May 1986.[59] This meeting also failed. Much to McFarlane's disgust, he did not meet ministers, and instead met in his words "third and fourth level officials".[59] At one point, an angry McFalane shouted: "As I am a Minister, I expect to meet with decision-makers. Otherwise, you can work with my staff".[59] The Iranians requested concessions such as Israel's withdrawal from the Golan Heights, which the United States rejected.[58] More importantly, McFarlane refused to ship spare parts for the Hawk missiles until the Iranians had Hezbollah release the American hostages whereas the Iranians wanted to reverse that sequence with the spare parts being shipped first before the hostages were freed.[59] The differing negotiating positions led to McFarlane mission going home after four days.[60] After the failure of the secret visit to Tehran, McFarlane advised Reagan not to talk to the Iranians anymore, advice that was disregarded.[60]

On 26 July 1986, Hezbollah freed the American hostage Father Lawrence Jenco, former head of Catholic Relief Services in Lebanon.[61] Following this, William Casey, head of the CIA, requested that the United States authorize sending a shipment of small missile parts to Iranian military forces as a way of expressing gratitude.[62] Casey also justified this request by stating that the contact in the Iranian government might otherwise lose face or be executed, and hostages might be killed. Reagan authorized the shipment to ensure that those potential events would not occur.[62] North used this release to persuade Reagan to switch over to a "sequential" policy of freeing the hostages one by one, instead of the "all or nothing" policy that the Americans had pursued until then.[60] By this point, the Americans had grown tired of Ghobanifar who had proven himself a dishonest intermediary who played off both sides to his own commercial advantage.[60] In August 1986, the Americans had established a new contact in the Iranian government, Ali Hashemi Bahramani, the nephew of Rafsanjani and an officer in the Revolutionary Guard.[60] The fact that the Revolutionary Guard was deeply involved in international terrorism seemed only to attract the Americans more to Bahramani, who was seen as someone with the influence to change Iran's policies.[60]Richard Secord, an American arms dealer who was being used as a contract with Iran wrote to North: "My judgement is that we have opened up a new and probably better channel into Iran".[60] North was so impressed with Bahramani that he arranged for him to secretly visit Washington D.C and gave him a guided tour at midnight of the White House.[60]

North frequently met with Bahramani in the summer and fall of 1986 in West Germany, discussing arms sales to Iran, the freeing of hostages held by Hezbollah and how best to overthrow President Saddam Hussein of Iraq and the establishment of "a non-hostile regime in Baghdad".[60] In September and October 1986 three more Americans—Frank Reed, Joseph Cicippio, and Edward Tracy—were abducted in Lebanon by a separate terrorist group, who referred to them simply as "G.I. Joe," after the popular American toy. The reasons for their abduction are unknown, although it is speculated that they were kidnapped to replace the freed Americans.[63] One more original hostage, David Jacobsen, was later released. The captors promised to release the remaining two, but the release never happened.[64]

During a secret meeting in Frankfurt in October 1986, North told Bahramani that: "Saddam Hussein must go".[60] North also claimed that Reagan had told him to tell Bahramani that: "Saddam Hussein is an asshole".[60] Behramani during a secret meeting in Mainz informed North that Rafsanjani "for his own politics...decided to get all the groups involved and give them a role to play".[65] Thus, all the factions in the Iranian government would be jointly responsible for the talks with the Americans and "there would not be an internal war".[65] Behramani's demands caused much dismay on the American side as he made clear to them that they would not dealing with a "moderate" faction in the Islamic Republic as the Americans liked to pretend to themselves, but rather with all the factions in the Iranian government, including those who were very much involved in terrorism.[65] Despite, the talks were not broken off.[65]

After a leak by Mehdi Hashemi, a senior official in the Army of the Guardians of the Islamic Revolution, the Lebanese magazine Ash-Shiraa exposed the arrangement on November 3, 1986.[66] This was the first public reporting of the weapons-for-hostages deal. The operation was discovered only after an airlift of guns (Corporate Air Services HPF821) was downed over Nicaragua. Eugene Hasenfus, who was captured by Nicaraguan authorities after surviving the plane crash, initially alleged in a press conference on Nicaraguan soil that two of his coworkers, Max Gomez and Ramon Medina, worked for the Central Intelligence Agency.[67] He later said he did not know whether they did or not.[68] The Iranian government confirmed the Ash-Shiraa story, and ten days after the story was first published, President Reagan appeared on national television from the Oval Office on November 13, stating:

My purpose was... to send a signal that the United States was prepared to replace the animosity between [the U.S. and Iran] with a new relationship... At the same time we undertook this initiative, we made clear that Iran must oppose all forms of international terrorism as a condition of progress in our relationship. The most significant step which Iran could take, we indicated, would be to use its influence in Lebanon to secure the release of all hostages held there.[9]

During the trial, North testified that on November 21, 22, or 24, he witnessed Poindexter destroy what may have been the only signed copy of a presidential covert-action finding that sought to authorize CIA participation in the November 1985 Hawk missile shipment to Iran.[50]U.S. Attorney GeneralEdwin Meese admitted on November 25 that profits from weapons sales to Iran were made available to assist the Contra rebels in Nicaragua. On the same day, John Poindexter resigned, and President Reagan fired Oliver North.[69] Poindexter was replaced by Frank Carlucci on December 2, 1986.[70] When the story broke, many legal and constitutional scholars expressed dismay that the NSC, which was supposed to be just an advisory body to assist the President with formulating foreign policy had "gone operational" by becoming an executive body covertly executing foreign policy on its own.[71] In fact, the National Security Act of 1947 which created the NSC gave that council the vague right to perform "such other functions and duties related to the intelligence as the National Security Council may from time to time direct".[72] However, the NSC had usually, but not always had acted as an advisory agency until the Reagan administration when the NSC "gone operational", a situation that was condemned by both the Tower commission and by Congress as a departure from the norm.[72] The American historian James Canham-Clyne asserted that Iran–Contra affair and the NSC "going operational" were not departures from the norm, but were the logical and natural consequence of existence of the "national security state", the vast plethora of shadowy government agencies with multi-million dollar budgets operating with little oversight from Congress, the courts or the media, and for whom upholding national security justified almost everything.[72] Canham-Clyne argued that for the "national security state", the law was an obstacle to be surmounted rather than something to uphold and that the Iran–Contra affair was just "business as usual" rather anything exceptional, something he asserted that the media missed by focusing on the NSC having "gone operational".[72]

In his exposé Veil: The Secret Wars of the CIA 1981–1987, journalist Bob Woodward chronicles the role of the CIA in facilitating the transfer of funds from the Iran arms sales to the Nicaraguan Contras spearheaded by Oliver North.[73] According to Woodward, then Director of the CIA, William J. Casey, admitted to him February 1987 that he was aware of the diversion of funds to the contras.[74] The controversial admission occurred while Casey was hospitalized for a stroke, and, according to his wife, was unable to communicate. On May 6, 1987, William Casey died the day after Congress began its public hearings on Iran–Contra. Independent Counsel, Lawrence Walsh later wrote: "Independent Counsel obtained no documentary evidence showing Casey knew about or approved the diversion. The only direct testimony linking Casey to early knowledge of the diversion came from [Oliver] North."[75]

On November 25, 1986, President Reagan announced the creation of a Special Review Board to look into the matter; the following day, he appointed former Senator John Tower, former Secretary of State Edmund Muskie, and former National Security Adviser Brent Scowcroft to serve as members. This Presidential Commission took effect on December 1 and became known as the Tower Commission. The main objectives of the commission were to inquire into "the circumstances surrounding the Iran-Contra matter, other case studies that might reveal strengths and weaknesses in the operation of the National Security Council system under stress, and the manner in which that system has served eight different presidents since its inception in 1947".[4] The Tower Commission was the first presidential commission to review and evaluate the National Security Council.

President Reagan (center) receives the Tower Commission Report in the White House Cabinet Room; John Tower is at left and Edmund Muskie is at right, 1987.

President Reagan appeared before the Tower Commission on December 2, 1986, to answer questions regarding his involvement in the affair. When asked about his role in authorizing the arms deals, he first stated that he had; later, he appeared to contradict himself by stating that he had no recollection of doing so.[76] In his 1990 autobiography, An American Life, Reagan acknowledges authorizing the shipments to Israel.[77]

The report published by the Tower Commission was delivered to the president on February 26, 1987. The Commission had interviewed 80 witnesses to the scheme,[4] including Reagan, and two of the arms trade middlemen: Manucher Ghorbanifar and Adnan Khashoggi.[76] The 200-page report was the most comprehensive of any released,[76] criticizing the actions of Oliver North, John Poindexter, Caspar Weinberger, and others. It determined that President Reagan did not have knowledge of the extent of the program, especially about the diversion of funds to the Contras,[4] although it argued that the president ought to have had better control of the National Security Council staff.[4] The report heavily criticized Reagan for not properly supervising his subordinates or being aware of their actions.[4] A major result of the Tower Commission was the consensus that Reagan should have listened to his National Security Advisor more, thereby placing more power in the hands of that chair.[4]

In January 1987, Congress announced it was opening an investigation into the Iran–Contra affair. Depending upon one's political perspective, the Congressional investigation into the Iran–Contra affair was either an attempt by the legislative arm to gain control over an out-of-control executive arm, a partisan "witch hunt" by the Democrats against a Republican administration or a feeble effort by Congress that did far too little to rein in the "imperial presidency" that had run amok by breaking numerous laws.[78] The Democratic-controlled United States Congress issued its own report on November 18, 1987, stating that "If the president did not know what his national security advisers were doing, he should have".[5] The congressional report wrote that the president bore "ultimate responsibility" for wrongdoing by his aides, and his administration exhibited "secrecy, deception and disdain for the law".[79] It also read that "the central remaining question is the role of the President in the Iran–Contra affair. On this critical point, the shredding of documents by Poindexter, North and others, and the death of Casey, leave the record incomplete".[7]

Reagan expressed regret regarding the situation during a nationally televised address from the Oval Office on March 4, 1987, and two other speeches;[80] Reagan had not spoken to the American people directly for three months amidst the scandal.[81] President Reagan told the American people the reason he did not update them on the scandal:

The reason I haven't spoken to you before now is this: You deserve the truth. And as frustrating as the waiting has been, I felt it was improper to come to you with sketchy reports, or possibly even erroneous statements, which would then have to be corrected, creating even more doubt and confusion. There's been enough of that.[81]

He then took full responsibility for the acts committed:

First, let me say I take full responsibility for my own actions and for those of my administration. As angry as I may be about activities undertaken without my knowledge, I am still accountable for those activities. As disappointed as I may be in some who served me, I'm still the one who must answer to the American people for this behavior.[81]

Finally, the president stated that his previous assertions that the U.S. did not trade arms for hostages were incorrect:

A few months ago I told the American people I did not trade arms for hostages. My heart and my best intentions still tell me that's true, but the facts and the evidence tell me it is not. As the Tower board reported, what began as a strategic opening to Iran deteriorated, in its implementation, into trading arms for hostages. This runs counter to my own beliefs, to administration policy, and to the original strategy we had in mind.[81]

To this day, Reagan's role in the transactions is not definitively known; it is unclear exactly what Reagan knew and when, and whether the arms sales were motivated by his desire to save the U.S. hostages. Oliver North wrote that "Ronald Reagan knew of and approved a great deal of what went on with both the Iranian initiative and private efforts on behalf of the contras and he received regular, detailed briefings on both...I have no doubt that he was told about the use of residuals for the Contras, and that he approved it. Enthusiastically."[82] Handwritten notes by Defense Secretary Weinberger indicate that the President was aware of potential hostages transfers with Iran, as well as the sale of Hawk and TOW missiles to what he was told were "moderate elements" within Iran.[8] Notes taken on December 7, 1985, by Weinberger record that Reagan said that "he could answer charges of illegality but he couldn't answer charge [sic] that 'big strong President Reagan passed up a chance to free hostages'".[8] The Republican-written "Report of the Congressional Committees Investigating the Iran-Contra Affair" concluded, that

There is some question and dispute about precisely the level at which he chose to follow the operation details. There is no doubt, however, ... [that] the President set the US policy towards Nicaragua, with few if any ambiguities, and then left subordinates more or less free to implement it.[83]

Domestically, the scandal precipitated a drop in President Reagan's popularity as his approval ratings saw "the largest single drop for any U.S. president in history", from 67% to 46% in November 1986, according to a New York Times/CBS News poll.[84] The "Teflon President", as Reagan was nicknamed by critics,[85] survived the scandal, however, and by January 1989 a Gallup poll was "recording a 64% approval rating", the highest ever recorded for a departing President at that time.[86]

Internationally, the damage was more severe. Magnus Ranstorp wrote, "U.S. willingness to engage in concessions with Iran and the Hezbollah not only signaled to its adversaries that hostage-taking was an extremely useful instrument in extracting political and financial concessions for the West but also undermined any credibility of U.S. criticism of other states' deviation from the principles of no-negotiation and no concession to terrorists and their demands".[87]

In Iran, Mehdi Hashemi, the leaker of the scandal, was executed in 1987, allegedly for activities unrelated to the scandal. Though Hashemi made a full video confession to numerous serious charges, some observers find the coincidence of his leak and the subsequent prosecution highly suspicious.[88]

Oliver North, member of the National Security Council convicted of accepting an illegal gratuity, obstruction of a congressional inquiry, and destruction of documents, but the ruling was overturned since he had been granted immunity.[94]

Fawn Hall, Oliver North's secretary, was given immunity from prosecution on charges of conspiracy and destroying documents in exchange for her testimony.[95]

Jonathan Scott Royster, Liaison to Oliver North, was given immunity from prosecution on charges of conspiracy and destroying documents in exchange for his testimony.[96]

National Security Advisor John Poindexter was convicted of five counts of conspiracy, obstruction of justice, perjury, defrauding the government, and the alteration and destruction of evidence. A panel of the D.C. Circuit overturned the convictions on November 15, 1991 by a vote of 2 to 1[97][98] and the Supreme Court refused to hear the case.[99]

Duane Clarridge. An ex-CIA senior official, he was indicted in November 1991 on seven counts of perjury and false statements relating to a November 1985 shipment to Iran. Pardoned before trial by President George H. W. Bush.[100][101]

Richard V. Secord. Former Air Force major general, who was involved in arms transfers to Iran and diversion of funds to Contras, he pleaded guilty in November 1989 to making false statements to Congress and was sentenced to two years of probation. As part of his plea bargain, Secord agreed to provide further truthful testimony in exchange for the dismissal of remaining criminal charges against him.[102][103]

Albert Hakim. A businessman, he pleaded guilty in November 1989 to supplementing the salary of North by buying a $13,800 fence for North with money from "the Enterprise," which was a set of foreign companies Hakim used in Iran-Contra. In addition, Swiss company Lake Resources Inc., used for storing money from arms sales to Iran to give to the Contras, plead guilty to stealing government property.[104] Hakim was given two years of probation and a $5,000 fine, while Lake Resources Inc. was ordered to dissolve.[102][105]

Oliver North and John Poindexter were indicted on multiple charges on March 16, 1988.[106] North, indicted on 16 counts, was found guilty by a jury of three felony counts. The convictions were vacated on appeal on the grounds that North's Fifth Amendment rights may have been violated by the indirect use of his testimony to Congress, which had been given under a grant of immunity. In 1990, Poindexter was convicted on several felony counts of conspiracy, lying to Congress, obstruction of justice, and altering and destroying documents pertinent to the investigation. His convictions were also overturned on appeal on similar grounds. Arthur L. Liman served as chief counsel for the Senate during the Iran–Contra Scandal.[107]

During his election campaign in 1988, Vice President Bush denied any knowledge of the Iran–Contra affair by saying he was "out of the loop". Though his diaries included that he was "one of the few people that know fully the details", he repeatedly refused to discuss the incident and won the election.[110] However, a book published in 2008 by Israeli journalist and terrorism expert Ronen Bergman asserts that Bush was personally and secretly briefed on the affair by Amiram Nir, counterterrorism adviser to the then Israeli Prime Minister, when Bush was on a visit to Israel. "Nir could have incriminated the incoming President. The fact that Nir was killed in a mysterious chartered airplane crash in Mexico in December 1988 has given rise to numerous conspiracy theories", writes Bergman.[111] On December 24, 1992, nearing the end of his term in office after being defeated by Bill Clinton the previous month, Bush pardoned six administration officials, namely Elliott Abrams, Duane Clarridge, Alan Fiers, Clair George, Robert McFarlane, and Caspar Weinberger.[112]

In Poindexter's hometown of Odon, Indiana, a street was renamed to John Poindexter Street. Bill Breeden, a former minister, stole the street's sign in protest of the Iran–Contra affair. He claimed that he was holding it for a ransom of $30 million, in reference to the amount of money given to Iran to transfer to the Contras. He was later arrested and confined to prison, making him, as satirically noted by Howard Zinn, "the only person to be imprisoned as a result of the Iran–Contra Scandal".[113]

The 100th Congress formed a joint committee (Congressional Committees Investigating The Iran-Contra Affair) and held hearings in mid-1987. Transcripts were published as: Iran-Contra Investigation: Joint Hearings Before the Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition and the House Select Committee to Investigate Covert Arms Transactions with Iran (U.S. GPO 1987-88). A closed Executive Session heard classified testimony from North and Poindexter; this transcript was published in a redacted format.[114] The joint committee's final report was Report of the Congressional Committees Investigating the Iran-Contra Affair With Supplemental, Minority, and Additional Views (U.S. GPO November 17, 1987).[115] The records of the committee are at the National Archives, but many are still non-public.[116]

The Tower Commission Report was published as the Report of the President's Special Review Board. U.S. GPO February 26, 1987. It was also published as The Tower Commission Report, Bantam Books, 1987, ISBN 0-553-26968-2[118]

The Office of Independent Counsel/Walsh investigation produced four interim reports to Congress. Its final report was published as the Final Report of the Independent Counsel for Iran/Contra Matters.[119] Walsh's records are available at the National Archives.[120]

^Walsh, Lawrence E. (August 4, 1993). "Final Report of the Independent Counsel For Iran/Contra Matters Vol. I: Investigations and Prosecutions". Summary of Prosecutions. U.S. Court of Appeal for the District of Columbia.